5 Tools for Teaching Your Kids to Save Money

Piggy bank - a tool for kids to save money

All children are different. My six children may all look the same on the outside, but on the inside they all march to the beat of a different drum. I have naturally hard workers, and I have those we trained to work. I have a son who breathes music, and I have another son that needed his music lessons.

Likewise, I have a few who squirrel away every penny they get and a few whose pennies slip right between their fingers. Yet as a parent, you want to do your best to train your children to have positive character qualities—and saving money is one of them. Here are 5 tools for teaching your kids to save money.

1. Commission – not allowance.

We have never given our children an allowance. We teach them that everyone in the family does a part to make the family succeed; whether that is washing the dishes, mowing the lawn, or helping with the family business. I believe that when children are given everything they ask for they tend to grow up expecting life to give them everything they want. That is not reality. Once a child’s regular schoolwork and chores are done, we have a list of extra jobs he can choose from for a commission. That list would include things that go above and beyond what is normally expected.

Another way we’ve taught our children to earn is to foster an entrepreneurial spirit in them. From the time our oldest was little, my husband taught him to scrap metal. He would save pop cans, electric cords from discarded appliances, and old window frames and take them to the scrap yard at the end of the month. He did this until he reached his teenage years and secured a “real job.” Then the scrap business passed down to the next boy. Besides scrapping, our kids have sold crafts, mowed lawns, baked bread, decorated cakes, sold eggs, and done general handyman work to earn money.

Related: Check out more ways for teens to earn money.

2. A piggy bank.

Once your child has the pennies to collect, give him a place to put them. I think the old-fashioned, clear glass piggy banks are the best. You can see the money accumulating inside, you can hear the clinking sound of the coins (very important for someone encouraged by sensory stimulation), and you can take the cork out of the bottom and count your savings. Kids love to count money and this activity encourages them to put even more into their piggy bank.

3. A simple budget.

Once a child sees the money rolling in, he will want to spend it all on candy. That is natural. But you can nip this habit in the bud if you give him a simple budget to follow. Here is one that we have used with great success.

  • 10% goes to God’s work.
  • 50% goes into long-term savings.
  • 20% goes into short-term savings.
  • 20% goes into his pocket for spending.

Explain to the child that long-term savings is money saved for his future college, automobile, or some other major purchase. He is not to touch this money until he is at least 18 years old. Short-term savings is for that new bike he’s eyeing, spending money for summer camp, or some other larger expense that will likely occur within the year. The money that goes into his pocket is for the sweet tooth—although you can steer him clear of the candy store.

Obviously, this example is for the very young child without a lot of financial needs. A teenager would need to adjust this budget to put more money in his pocket.

4. Games!

Games are the number one tool I use to reinforce concepts in our homeschooling—Scrabble® for spelling, Quizmo® for multiplication tables, and Othello® for critical thinking. You can do the same when teaching your kids about money. Monopoly® and the Game of Life® are the first ones that come to mind; although the classic game Acquire® and the new Settlers of Catan® are other good choices. These games may not focus on saving money specifically, but saving, budgeting, trading, and investing are all principles included in the strategy.

If your child prefers a video game, check out Planet Orange. Developed by ING Direct, this website provides “fun and engaging activities while kids embark on a mission to discover the importance of money.”

5. Software or online programs.

Check out software or online programs that teach kids to watch their savings grow similar to the old-fashioned passbooks. I remember my parents taking my brother and me to the bank and opening a passbook savings account. Those passbooks were great tools. Each time we visited the bank to make a deposit, the teller would write the amount of the deposit and our total in the book. Just having that book and watching the balance grow was a great incentive to put more in.

Passbook accounts are non-existent now, but there are other programs you can use. With KidsSave, you can set up an account for each child in the family. Its easy-to-use interface introduces them to basic concepts like saving, budgeting, spending and goal setting. Currently, they have a 35-day free trial.

Many tools exist to teach a child any practical life skill like saving money. Surely, you have used other proven methods that I have not covered here. I would love to hear about them in the comments!

Leave a comment below with your methods for teaching kids how to save money. We’ll meet you there!

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10 Comments
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  1. I love the idea of giving kids a “Commission”

  2. Great article! My 4 yr old has a piggy bank and loves putting in the random pennies and coins he finds throughout the house and various parking lots. At what age do you recommend teaching children about a budget? My son clips coupons with me and I explain that we use them to save money. In the grocery store I explain that we’ll get something at another store because it’s less expensive at the other store. I explain that we give things/food/money to people who don’t have enough because God has given us so much. Not sure how else to bring home lessons about money for his age (on the side: he and his two siblings go to day school; hubby and I both work outside the home).

    • Great questions, Kristi. I think that if a child is old enough to put pennies in a bank, he’s old enough to know that every 10th penny goes in the offering at church. That could be his first “budget.” Next step: two banks. One for spending money, one for saving for something special. Shopping is a great way to share about finances with your kids. Looks like you’re on the right track.

  3. Carol,

    Thanks for the wonderful article. My husband and I write and speak on financial and economic topics as well. We are currently expecting our first child and are definitely going to implement some of your techniques. We love the idea of commission or teaching them how to make money via a business. Thanks again!

  4. Thanks for the great post. We also let my son choose extra work to raise money. I was wondering about your percentage of only 20% for spending. Did any of your kids ever balk at this?

  5. Great ideas! And so timely!
    We live in New Zealand and have 3 children, the eldest being 4 and we were wondering how and when to start. Love the idea of “commision” so it is earnt and not simply expected.
    A simple idea which I have heard and (may adapt somewhat) is a “3 jar” (or piggy bank) system. One for saving, one for spending and one for giving away.
    I will have to alter my own habits in a plastic & online society to actually have some physical money around :-)

  6. Wow glad to read this article of yours. Yeah my child started also a piggy bank and I teach him to save money for important use.

  7. Great article!
    My son is only year and half now so it is too soon to teach him finance or accounting :)
    But me and my wife are already thinking about giving him proper financial education. It is important that everybody knows the value of money and pleasure of earning then spending money since childhood. Still, it is more important to teach kids not to become too obsessive and dependant about money. They should understand that money is the means of living and sometimes luxury. They shouldn’t be spoilt by money and they should be ready to donate when necessary. And this process must be sincere and coming from hearnt, not forced by others.

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